BHA and AMLR merge to form UKHospitality. A tough few years lie ahead.

The British Hospitality Association and the Association of Multiple Licensed Retailers have merged to form UKHospitality. It faces a tough few years attracting new members, say Bob Cotton (Chief Executive, BHA, 2000-2010) and Miles Quest (PR Consultant, 1996-2012).

What’s the purpose of a trade association? To lobby government? To represent the industry? To lead the industry? To give advice to members about new legislation? To help make members become more profitable? To provide valuable industry information?

Probably all of these – and more.  So a lot of weight and expectations are resting on Kate Nicholls’ shoulders as she takes over the helm of UKHospitality.  Representing so many sectors of the industry – hotels, restaurants, pubs, clubs, cafes, contract catering, leisure – makes it even tougher.

Hospitality is a broad church – almost too broad – and the association, with necessarily restricted resources, will have its work cut out to balance the needs of all the sectors. 

It has to satisfy the smaller independent member, who needs on-going operational advice and up-to-date information, as well as the larger corporates who can generally look after themselves operationally (though recently you might doubt that) but are more concerned with longer-term lobbying issues.  These different needs aren’t easy to reconcile, especially as the larger players contribute by far the greatest portion of fee income.   

But one thing is clear.  UKHospitality is primarily concerned with the hospitality industry, not tourism – and if it is to be successful, it’ll only grow if hospitality businesses see a value in membership. 

“Nor is recruitment and retention made any easier by the shortcomings in the apprentice levy system, which needs heavy revision if it is to really boost apprentice numbers.”

Even with BHA and AMLR combined, UKHospitality represents just 600 businesses and 60,000 outlets in an industry that probably boasts more than 60,000 businesses and over 250,000 outlets.  The claim that it represents the hospitality industry thus rests on rather thin ice.   It will need to recruit many new members, not just from London and the South East, but from the UK’s various nations and regions, if it to become as influential as it obviously should be.

Of course, it’s true that, among those 600 businesses, are many of the UK’s largest hotel and catering companies, but that might highlight the problem of recruiting smaller members.   Hospitality is an industry made up of a large number of small independent businesses, many of whom believe that only the major companies benefit from a trade association’s work.   They have never seen the point of joining any trade or professional association.  In any case, they will benefit from any lobbying success so why bother to join?  Somehow, this laisser faire attitude will need to change – no easy task.

Despite the fact that the association is such a, broad church, it nevertheless represents the three fairly well defined sectors of the industry – hotels and other serviced and leisure accommodation; food service (restaurants and contract catering) and drink (pubs).  So the common elements are food, drink and service. 

It has already set up sectoral committees with the intention of creating strong, identifiable sub-sectors.  Strong PR and a focused programme of activities for each sector are now needed if this is to attract new members and keep existing members happy.   Are there sufficient financial and manpower resources to accomplish this?

What, then, will attract new members and continue to satisfy those already in membership?  If lobbying is a key function for larger companies there is no doubt that it also helps small operators as well. 

“It is this kind of activity that would emphasise the association’s relevance to members and so encourage recruitment.”

BHA’s efforts to attract more young people into the industry, through its curiously named Big Conversation programme, addressed a real need.   This is a valuable activity that helps promote hospitality as a career for young people even though a recent Inter Continental Hotels survey indicates that there is a long way to go before hospitality becomes a first choice career.  But, as usual, most operators have remained quite happy to support this effort without being convinced they have to financially contribute by joining the association itself.

Nor is recruitment and retention made any easier by the shortcomings in the apprentice levy system, which needs heavy revision if it is to really boost apprentice numbers.

Other lobby issues directly affect all members.  The 2017 business rate review clobbered many restaurants; a review of the business rate system and how it is calculated for the three different sectors of the industry – hotels, restaurants and pubs – is long overdue and would benefit every operator.  Pressing for a review would hopefully lead to a business rates system that is much fairer all round by encompassing the Gig economy. 

“Rising costs are having a negative impact on every sector.  Advice on how to deal with them could yield huge benefits for many operators.”

More pressure must continue to be exerted on government to agree the number of migrant workers allowed in during the Brexit transition period and after Brexit.  This is a key industry concern which ministers appear to have conceded but numbers have yet to be agreed.  As it’s likely that any number agreed will be far lower than the numbers needed, further lobbying is important. 

The annual increase in the National Living Wage (NLW) is providing many workers (about 60 per cent of the total) with an enforced annual wage increase.  The industry certainly needs to offer good wages, but at its own pace.  The NLW is forcing up hospitality payrolls nationally when it would be fairer if it was done regionally or even sectorally, like the old Wages Councils.  The one-size-fits-all NLW is skewing the labour market.   At present, the rate for London is probably too low but is possibly too high for parts of the outer regions of the country. 

But, important though these lobbying issues are, even more pertinent to operators are issues which directly affect their business prospects – costs, staffing, profits.  It is on these which the new association could most usefully concentrate. 

Rising costs are having a negative impact on every sector.  Advice on how to deal with them could yield huge benefits for many operators.   The enthusiastic development of highly focused short courses, seminars, publications and surveys and operational comparison schemes would enable members to operate more profitably and be more able to keep abreast of current trends.   Perhaps in conjunction with the Institute of Hospitality and the British Institute of Innkeeping, the new association could be leading members to greater efficiencies and higher profits.  It is this kind of activity that would emphasise the association’s relevance to members and so encourage recruitment.

There are longer term issues, too, which need addressing.  The BHA’s (and the AMLR’s) attempt to persuade the government to introduce a five per cent VAT rate on serviced accommodation (and meals) is unlikely to succeed but, post Brexit, who knows?    Freedom from the EU may enable the government to look more closely at taxing a wider range of goods and services at different rates and, more pertinently, in different nations or regions of the UK, rather than retaining the current national system of VAT.  Pressure from Scotland, Northern Ireland, and Wales could realistically lead to variations in their overall tax regimes – and what happens there might well prove appropriate for different regions of England. 

Looking ahead, UKHospitality could now begin to consider how the industry should make the most of any new-found, post-Brexit tax freedoms.  Any tax system needs to raise revenue but it should also be flexible and fair.  The present national system, dominated by the London economy, is not necessarily right for other parts of the UK hospitality industry.